Camden Borough Council & Anor v Saint Benedict's Land Trust Ltd

A winding-up petition may proceed on an extant liability order unless the company establishes fraud, collusion, mistake or a miscarriage of justice. A retrospective alteration to a rating list does not itself extinguish the liability order. The court must instead consider whether reliance on the order, in the circumstances and for the amount claimed, would cause a miscarriage of justice.

A petition may be stayed or dismissed where the company has a genuine and serious cross-claim exceeding the petition debt and has been unable to litigate it. Speculative, time-barred or previously determined claims do not satisfy that test.

Camden Borough Council and Preston City Council presented a winding-up petition against Saint Benedict’s Land Trust Limited for alleged liability arising from costs orders and national non-domestic rates. The petition debt included a Magistrates’ Court liability order for rates.

After that order, the rating list was retrospectively altered, reducing the area of the hereditament and the amount claimed. The company also challenged the liability order and relied on a proposed cross-claim, including restitution, unjust enrichment, misfeasance in public office and breach of statutory duty.

The central issues were whether the liability order could be relied upon in its adjusted amount and whether the proposed cross-claim justified staying or dismissing the petition.

1. The petition succeeded. The court was satisfied that the formal requirements for a winding-up petition had been met and that the company’s non-payment supported an inference that it was unable to pay its debts under sections 122(1)(f) and 123(1)(e) of the Insolvency Act 1986.
2. A liability order remains effective unless set aside through the applicable procedure. The court could not go behind the order merely because the rating list had later been altered. The retrospective alteration did not itself terminate the liability order or extinguish the liability. However, reliance on the unreduced amount might have caused a miscarriage of justice. That risk was avoided because the petitioners limited the petition debt to the amount payable for the revised area.
3. The company’s proposed cross-claim did not justify staying or dismissing the petition. Under Re Bayoil [1999] 1 WLR 147, the relevant conditions included that the claim be genuine and serious, that the company had been unable to litigate it, and that it exceed the petition debt. The pleaded pecuniary claim was below the petition debt. In any event, the claims were insufficiently established, speculative, or raised too late.
4. Claims seeking to reopen earlier liability orders and costs orders could not properly be resurrected in fresh proceedings after the company had failed to challenge them at the appropriate time. The alleged misfeasance claim required proof of bad-faith abuse of public power and the requisite knowledge or intention. The alleged breach of statutory duty lacked identification of a relevant duty imposed for the protection of a class including the company.
5. The judge was minded to make the usual compulsory winding-up order, subject to hearing further submissions from counsel.

First-instance winding-up proceedings. No prior appellate history is stated for this judgment.